Saturday 8 November 2008 19.01 EST
First published on Saturday 8 November 2008 19.01 EST

Like any fan of Shena Mackay's work, I associate her strongly with a certain part of south London: Norwood, Crystal Palace, Sydenham; places whose suburban indignities, from crisp bags to car parks, she has often captured so beadily and yet so beautifully. In my mind's eye, I've always pictured her sitting in a muggy caff, a milky coffee going cold beside her on an orange Formica table while she drinks in other people's curious conversations. So it's unsettling to meet her in Southampton, to where she has moved to be close to one of her daughters: a bit like finding Sherlock Holmes not in Baker Street, but Birmingham. What is Southampton like? She looks characteristically vague and anxious. 'Well, it's hard to say... it's so... big.' But she likes it? 'Oh, yes. Yes, I do.'

She lives in a small, modernish house with a pointy roof and a pretty back garden in which three clay tortoises roam. She owns a real, living tortoise, too, but he lives with friends - for the company of other tortoises and because her new garden, which runs down to a stream, is unsuitable. Tortoises, she says with a small smile, are unreliable; contrary to popular belief, they move fast and are apt to wander. But this is not to say that they are unfeeling; she is certain that she is recognised when she visits.

Is she teasing me? I don't think so. Like her short stories, Mackay is wry and funny, but also deadly serious, somehow. In life, as on the page, she could tell you that scorned women are apt to metamorphose into hooved creatures with rectangular yellow eyes and long yellow teeth, the better to bite their ungrateful lovers; and a part of you - a very small part, but a part all the same - would be shiveringly inclined to believe her.

A woman like this puts in an appearance in The Atmospheric Railway, Mackay's new collection of stories (she sinks her jaw into a pompous academic, Professor Campbell Forsythe, for whom she once worked as his children's nanny - not that he remembers this crucial fact on their initial reacquaintance, of course). So does Southampton, though south London, with its dark cemeteries and its relics of Victorian greatness, is still a favoured setting. The title story is set in Dulwich, where retired cousins Neville and Beryl (such perfect Mackay names) are together tracing their family tree, though it's Beryl, as always, who is project leader.

'Neville and Beryl had grown up at a time when children, even the poorest, were expected to have hobbies. Beryl had dozens of them... she had conducted a correspondence with Big Chief I-Spy himself, the author of the I-Spy books.' Poor Neville, whose Meccano constructions had never lived up to his boyish imagination.

Mackay is not one of those writers who dreads publication; she doesn't fear reviewers, perhaps because they have always rated her work so highly ('the supreme lyricist of daily grot' is the slightly backhanded compliment that follows her around). In interviews, it is often said that she has never received her due, but she regards this as silly.

'It's slightly embarrassing. If you look back, every time a book comes out, I always have masses of good reviews. So what is my due? OK, I'm not a dame or any of that stuff. It's one of the great unanswerables.' A brief pause. 'But I am a fellow of the Royal Society of Literature and that's a good thing to be.'

Mackay was born in 1944. Her father did a series of jobs, from miner to ship's purser, and was often away; his marriage to Mackay's mother was mostly unhappy. She wanted to be a writer early on, a poet preferably. 'It was through reading, and loving words. I could read when I was three.'

Shortly before she left school - the family was living in Blackheath by this time and Mackay was attending Kidbrooke comprehensive, which she hated - she won a Daily Mirror poetry competition, judged by the likes of Kathleen Raine. The prize was £25. 'It was a huge amount of money, but because I was leaving school [she left with two O-levels], I had to buy these boring clothes for my job as an office junior; it had to be squandered on pleated skirts and cardigans.'

The job didn't work out but, soon after, she got another one, working in an antique shop in Chancery Lane. This turned out to be life-changing, in its way. The shop was owned by the parents of David Sylvester, the art critic, with whom she later had an affair (he was the father of her daughter, Cecily Brown, the artist). The Sylvesters' son-in-law, playwright Frank Marcus, who is probably best known for The Killing of Sister George, worked there with her. It was Marcus who encouraged her to keep at the novel she had begun writing. 'He found me an agent. He had it typed out for me.'

David Sylvester, meanwhile, introduced her to every painter you care to think of, from Frank Auerbach to Jasper Johns. She would visit the Colony Room Club in Soho with him, for nights out with Francis Bacon and Lucian Freud. 'Yes, I did meet them, but I was a young girl and they were middle-aged.' But she realised how famous they were? 'Oh, yeah. I mean, I met Giacometti. I certainly realised who he was. Sometimes, the impression is given that I used to hang out in the Colony Room. But I didn't really. They were David's friends, not mine.

'Francis could be scary. He could either be lovely or spiteful - though he was never spiteful to me. He liked me, so that was all right. It was a great time and I loved it, but at a certain point, that kind of life becomes quite sad. I realised it was much more glamorous actually to have a real life.'

Her two novellas, Dust Falls on Eugene Schlumburger and Toddler on the Run, were published in 1964; two years later, she married Robin Brown, a man from her Blackheath days, and together they brought up their three daughters in Surrey (Cecily was not told that Sylvester was her father until she was grown-up). At which point, Mackay the writer virtually disappeared. The newspaper profiles stopped appearing (as a young woman, Mackay was extremely beautiful and her youth, combined with her 'progressive' ideas about things like the royal family, meant that quite a few got written), and she more or less abandoned her work. It was 13 years before her next novel, A Bowl of Cherries, appeared.

She and Robin eventually divorced and she moved back to south London. Does she remember having felt frustrated during the years when she was not writing? 'I guess I felt cut off from literary life. I wouldn't say frustrated. It was the children's childhood, so it was time well spent. If I'm being honest, if I'd had more encouragement during that time, I might have written more. I did write one novel, The Firefly Motel, but it was never published. I found it recently and I reread it. I thought it wasn't too bad.' She laughs.

But after A Bowl of Cherries, she was on her way again. Three collections of short stories followed and several acclaimed novels, including the wonderful Dunedin, set in a New Zealand that she then had not even visited; The Orchard on Fire (shortlisted for the 1996 Booker Prize), which is set in the 1950s, and tells the story of young girl who attracts the attention of an older man; and Heligoland, about one woman's search for Utopia (shortlisted for the 2003 Orange Prize).

The Atmospheric Railway will be published with 23 selected short stories from her other collections and I cannot think of a greater treat to see one through the dark winter nights ahead. She is a dazzling sort of a writer, I think; shrewd, compassionate and, yes, lyrical. Be sure to eke them out, though. The good news is that Mackay is at work on a novel. The bad news is that it may be some time. When I ask her how it is going, she rolls her eyes. 'Slowly,' she says. Then she takes me into the garden, to contemplate the secret life of the tortoise.

• The Atmospheric Railway is published by Vintage, £17.99. To order a copy for £16.99 with free UK p&p, go to observer.co.uk/bookshop or call 0870 836 0855